In Module 5, we discuss the merging of debt and options. In addition to companies offering convertible bonds, they also offer other bonds linked to options or equity-linked notes. Assume you are a portfolio/risk manager and your company just issued one such instrument bond linked to options from the list below. Explain why you included the instrument in your portfolio.
- Debt Exchangeable for Common Stock (DECS)
- Premium Equity Participating Share (PEPS)
- Preferred Equity Redeemable for Common Stock (PERCS)